Is Now the Time to Invest in Ireland Again?

The Celtic Tiger boom years, and the subsequent bust, have made Ireland seem like a basket case, with the recent history of its housing market consigned to economics textbooks forever as an example of a hugely overinflated bubble.

Yet there are some signs that things are looking up for this small euro zone member.

Irish 10-year yields are more than five points lower than their eye-watering peak and are below 9 percent for the first time since April.

"The key message is that because of the very brutal austerity package, yields have come on with no help from the ECB," George Godber, fund manager, Matterley Asset Management, told CNBC Tuesday.

"I think you will start seeing the EFSF (European Financial Stability Facility) turn around to the rest of the periphery and say this is the route to follow."

The reduction in yields is partly caused by the lack of free flow in the Irish bond market, Marc Ostwald, strategist at Monument Securities, told CNBC Tuesday.

"The ECB owns so much of the Irish bond market, so there's so little free flow that you will get a massive bond rally when people start to see it being distinguished from the others," he said.

Interest rates on its bailout loans have fallen and the government is enacting measures to boost competitiveness.

"The non-financial economy has always been very, very healthy in Ireland, but it was brought down by the bust in the financial sector," said Ostwald.

There are even some signs of optimism returning to its seemingly disastrous housing market, with house prices in Dublin rising very slightly in July and the dramatic falls in value leveling off.

Residential property prices fell by just 0.8 percent in July this year across Ireland, compared with a decline of 2.1 percent in June and a decline of 1.3 percent in July 2010.

"Housing was the bubble of all bubbles and that could take 10 years to unwind," said Godber.

"It will continue to be extremely difficult, but every month it becomes less of a destructive force."